New York Laboratories Discover New Power

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For those of you following the story of New York’s new surcharge on clinical laboratory tests, there is a great lesson to be learned. It is a lesson in the extensive power possessed by clinical laboratories.

After New York’s hospital finance reform law passed the legislature last summer, lab industry representatives spoke with state legislators, the governor’s office and the Department of Health. They requested reconsideration and removal of laboratories from the tax pool. They got mixed signals of cooperation, but no action on the situation. Laboratories responded with a two-pronged strategy. First, they filed suit in state court to obtain injunctive relief. That suit was filed on December 30, 1997.

Second, as the 8.18% surcharge on laboratory tests took effect January 1, 1997, laboratories in New York, under the leadership of the New York State Clinical Laboratory Association (NYSCLA) began to send out patient bills with a simple message, paraphrased as: “Dear patient, this bill includes a tax which represents the first time New York State has imposed a direct tax on citizens for a healthcare service. Please let your elected state officials, the governor and the Department of Health know how you feel about this new tax.”

With 100,000 patient bills mailed daily, response was immediate. According to Tom Rafalsky, NYSCLA’s President, offices of the Department of Health are averaging at least 800 calls per day. The governor’s office, state senators and state representatives are receiving a constant flow of calls as well. Albany now pays serious attention to the valid issues raised by the clinical laboratory industry as to why they should be excluded from a taxing scheme to finance hospital care.

But the story gets better. Nearby “Taxachusetts,” always ready to raid taxpayers’ pockets, was preparing to follow New York’s example and tax laboratory tests. However, during last week’s hearing on proposed legislation to fund the Uncompensated Care Pool, it was asked why clinical laboratories were not included in the draft under consideration. A Massachusetts representative told the committee that “the nightmare in New York” had caused them to remove clinical laboratories from the Massachusetts bill.

For me, it validates the power possessed by clinical laboratories. They have only to recognize it and use it. By sending messages on patient bills, just like utility companies, the lab industry not only prevented the spread of this onerous tax scheme to Massachusetts, but they may prod New York legislators to remove clinical laboratories from the surcharge tax pool.


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